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Judgment
K. Chandru, J.—Heard both sides.
In O.A. No. 75 of 2009 and A.No.379 of 2009, the applicant is the plaintiff. O.A. No. 75 of 2009 is filed for an interim injunction restraining
the first respondent, his men, servants, agents or any other claiming through or under him from in any manner alienating, encumbering or in other
manner dealing with the schedule mentioned 25 WEGs supplied, erected and commissioned by the applicant under two purchase order
agreements, dated 22.07.2006 pending disposal of the suit.
A. No. 379 of 2009 is filed seeking for a pro-order prohibiting the second respondent/garnishee from disbursing the income accrued out of the
power generated from the schedule mentioned WEGs to the first respondent or any one claiming under them and consequently direct the second
respondent to deposit any sum payable upto Rs. 17,08,92,621/- being the suit claim to the first respondent by virtue of the power generated and
supplied to the second respondent from the schedule mentioned 25 WEGs supplied, erected and commissioned by the applicant under two
purchase order agreements, dated 22.07.2006 to the credit of the suit.
The plaintiff has filed the suit for a judgment and decree, directing the defendant to pay a sum of Rs. 8,57,61,849/- together with interest at the
rate of 24% per annum on the outstanding dues of Rs. 5,64,56,650/- and also for a direction to pay a sum of Rs. 8,51,30,772/- as compensation
towards damages.
The defendant has entered appearance and has filed an application in A. No. 1886 of 2009, seeking for revocation of leave to sue granted by
this Court, vide an order, dated 21.1.2009 in O.A. No. 212 of 2009.
The applicant/plaintiff is a company incorporated under the Companies Act, having its registered office at New Delhi and their works at
Chennai-78. The plaintiff company is engaged in the business of manufacture, supply, erection, commissioning and maintenance of Wind Electric
Generators (for short WEG) since 1987. It was stated that during the year 2006, the defendant approached the plaintiff for purchasing WEGs
from the plaintiff, which followed detailed negotiations and discussions. The defendant placed two purchase orders both dated 22.7.2006 upon the
plaintiff for supplying of 7 numbers and 18 numbers of WEGs respectively, in all aggregating to 25 numbers of Vestas RRB make, Pawan Shakthi
Type, 600 KW WEGs with 47 mtr. rotor dia on 50 mtr. tower height comprising various components specified in the purchase orders for a
consideration of Rs. 19,00,50,000/- and Rs. 48,87,00,000/- respectively. The two purchase orders were also filed along with the plaint.
The terms and conditions of the said purchase orders were the same excepting the number of WEGs differs. The purchase orders contained the
terms and conditions as to the site details, payment terms, the plaintiff''s right to repossess in the event of delay or default in payment, delivery
schedule, warranty, comprehensive operation and maintenance, expected generation, power purchase agreement, force majeure and consignee
details. The payment shedule provided that 25% of the purchase order value will be paid as advance along with the order and 60% of the
purchase order value will be paid on pro-rata basis. They are 20% within 7 days after delivering of Tower materials at site. 20% will be paid within
7 days after delivering of blade materials at site. 10% will be paid within 7 days after delivering of Nacelle at site and 10% will be paid on erection
of WEGs. The balance 15% will be paid within 7 days from the date of commissioning of WEG. The payment terms contained in the purchase
orders for 18 WEGs were 10% of the purchase order value will be paid in August, 2006. 15% of the purchase order value will be paid in January,
2007. 60% will be paid in four different schedules. Finally, 15% within 7 days from the date of commissioning of WEG. It was also provided in the
purchase orders that the ownership of the WEGs shall be repossessed by Vestas RRB if payments are not made as per the terms. Vestas RRB
shall not be held responsible to fulfill their contractual obligations under this order, if advances and material payments are delayed and not in line
with the payment schedule.
The plaintiff further stated that 7 numbers of WEGs under the first purchase order were to be delivered at Malgatti site, Karnataka and 18
numbers of WEGs under the second purchase order again at the same site at Karnataka. The purchase orders provides for expected generation.
These purchase orders were accepted by the plaintiff vide his letters, dated 24.7.2006 and 31.10.2006. Apart from the purchase orders, the
defendant had also issued the work orders and erection and commissioning orders corresponding to each of the purchase order. Subsequently,
there was further discussion between the parties and finally, prices of each WEG to be erected and commissioned by the plaintiff as per the
purchase orders were fixed at Rs. 2,95,00,000/- inclusive of tax and duties applicable in Karnataka, in all aggregating total sum of Rs.
73,75,00,000/-. Pursuant to the terms, the plaintiff proceeded to supply the components of WEGs and for erecting and commissioning the same at
Malgatti site. The project faced serious problems due to non availability of power evacuation approval from the Karnataka Power Transmission
Corporation Limited. In view of the inordinate delay and considering the time stipulation in the agreement for commissioning of the wind mills, the
plaintiff proposed an alternative site at Harihar for installation of the 7 WEGs. The proposal for shifting of the site was also accepted by the
defendant vide his letter, dated 13.09.2006. the location of balance 18 WEGs was to be at Malgatti, Gajendragarh in Karnataka.
It was stated that the plaintiff erected and commissioned the WEGs on various dates at Gajendragarh site during March, 2007 and at Harihar
site during September, 2006. As per the agreement, the defendant was liable to make further payments to the tune of Rs. 5,64,00,788/- for 18
WEGs and Rs. 55,862/- for 7 WEGs, in all totalling a sum of Rs. 5,64,56,650/-. The balance sale consideration remained outstanding despite
several requests and reminders by the plaintiff. The copies of the correspondence were also filed along with the plaint. The defendant justifying the
default by attempting to convert the generation estimate provided under the purchase orders into one of an absolute generation guarantee of 15
lakhs units per WEG per annum. At the defendant''s instance, the parties had a meeting on 3.11.2007 at the residence of the defendant''s friend at
Mumbai. The defendant''s friend Mr. P.C. Jain, who had also set up WEGS supplied by the plaintiff and also had some grievances nevertheless
had complied with his obligations in terms unlike the defendant, who never released any fund based on the meeting held on 3.11.2007.
During the course of the meeting, the plaintiff offered to compensate the defendant in the event of generation of the WEGs falling below the
generation of 15 lakhs units per WEG per annum. The terms agreed by the plaintiff in the meeting held on 3.11.2007 should be read in the context
of and in conjunction with the purchase order agreement, which is binding on the parties. But, however, the defendant had chosen to over-ride the
purchase order agreements by falsely claiming as if the plaintiff had extended an unconditional and absolute guarantee of 15 lakhs unit per WEG
per annum regardless of the wind availability at the site. The agreement to compensate as well as to shift the WEGs to a better site was given in the
context of the WEGs failing to perform as per the power curve. The very question of non performance of the WEGs will arise only on its failure to
conform to the power curve. The plaintiff never undertook to bestow a windfall upon the defendant even in the absence of any breach or shortfall
in the performance of the WEGs. Without any legal excuse, the defendant is withholding the payments agreed to be paid. The intention expressed
by the defendant to adjust the balance sale consideration towards the so-called compensation for the shortfall in generation was illegal. The
defendant also had preferred a complaint before the National Consumer Disputes Redressal Commission at New Delhi. The plaintiff is taking steps
to resist the petition filed by the defendant.
It was stated that the plaintiff had suffered huge loss on account of withholding the amount by the defendant. Therefore, it was stated that the
causes of action for the suit arose at Chennai-78, where the purchase order agreements, dated 22.7.2006 came into existence and the plaintiff had
accepted the same and also where the entire purchase consideration in respect of 25 WEGs were payable and when the defendant approached
the plaintiff and negotiations and discussions were held and also when the plaintiff proceeded to supply the components of WEGs for erection and
commissioning at Malgatti, Gajendragarh and subsequently at the alternative site at Harihar and when there were meetings held on various dates
and also when the plaintiff received notice from the national Consumer Disputes Redressal Commission.
This suit was filed on 12.12.2008 and was admitted on 27.01.2009. It was on the basis of the suit, the two applications were taken out by the
plaintiff. In both the applications, only notice was ordered by this Court. After receiving the notice, the defendant had taken out the application in
A.No.1886 of 2009 for revocation of leave granted earlier by this Court.
It is the stand of the defendants that the registered office of the plaintiff was not within the city of Chennai. The defendant was also not residing
within the city of Madras. He is residing and carrying on business from Jayasinghpur in Maharashtra. The present suit is an attempt to harass the
defendant. The garnishee respondent in the application filed by the plaintiff is the Karnataka Power Transmission Corporation Limited, which is
also not carrying on business within Chennai. The entire transaction was entered into between the parties outside the State of Tamil Nadu. The
plaintiff had identified the project at Mallgatti, Ron Taluk, Gadag District, Karnataka State. The plaintiff had approached the defendant for
investment and visited the plaitiff at Maharashtra on 15.7.2006. Subsequent to the proposal, it was discussed and finalized at Maharashtra and the
purchase orders were also accepted at Maharashtra. The details for payment were also set out. Since the entire operations of the purchase orders
were done in Karnataka State, the issues took place outside the jurisdiction of this Court.
It was also stated that after the installation of the WEGs, there were several disputes, which arose between the plaintiff and the defendant on
account of guaranteed generation of electrical units. Therefore, for the deficiency of service and supply of defective materials, the defendant had
approached the National Commissione with O.P. No. 155 of 2008. The present suit was filed as a counter blast to the defendant''s allegations.
The plaintiff is indulging in forum shopping. Since the plaintiff is having its office at Harihar, they could have filed those proceedings in the court with
appropriate jurisdiction. The leave obtained under Clause 12 of the Letters Patent was illegal. Apart from denying various allegations, it was stated
that the plaintiff''s having office at Chennai has no relevance for grant of leave and since no part of the cause of action arose within the jurisdiction
of this Court, the leave granted to sue has to be revoked.
On notice on this application, the plaintiff has filed a counter affidavit, dated 6.6.2009. It was stated that the purchase orders, dated 24.7.2006
and 31.10.2006, were accepted by the plaintiff and concluded at Chennai. It was further stated that the plaintiff was manufacturing WEGs at
Chennai and they were sent on stock transfer basis to various parts of the Country. The invoices for payment of sales tax were made in Bangalore
to comply with the provisions of law, but the entire manufacturing operations of the company are done at Chennai. The orders were also
addressed to Chennai address. The acceptance letter is also from Chennai. Hence this Court has ample jurisdiction. Their office at Karnataka is
only a service office. The transactions between the parties and the suit claim are not peculiar to any geographic locations nor is it affected by any
local customs or usage. It is under these circumstances, a prayer was made to dismiss the application filed by the defendant.
Mr. P.S. Raman, learned Additional Advocate General leading M/s. Anup Shah Law Firm submitted that this Court has no jurisdiction to
entertain the suit as no part of cause of action arose within the jurisdiction of this Court. He relied upon the judgment of a division bench of this
Court in Battepati Parthasarathy Gupta Vs. The Calcutta Glass and Silicate Works (1936) Ltd., and submitted that when no part of performance
was contemplated to take place at Chennai and no part of the cause of action arose in Chennai, the leave should not be granted. But, in the very
same judgment, the Division Bench in paragraph 5 held as follows:
It cannot be denied and it needs no authority to support the proposition-that a part of the cause of action to sustain a suit for damages for
breach of contract would certainly arise at the place where performance of the contract is provided. ""Performance of the contract"" may consist in
delivery as well as payment of the price. It therefore becomes necessary to find out under the terms of the contracts in suit if either delivery of the
goods or payment of the price is contemplated to take place at Madras....
Thereafter, learned Additional Advocate General placed reliance upon a judgment of a Division Bench of this Court in S. Nagaraj Vs. S.
Govindaswamy and Another, for the purpose of contending that as to what constitutes a cause of action. For this purpose, the Division Bench had
referred to the earlier Full Bench judgment of this Court. The following passage found in paragraph 10 may be usefully extracted below:
... In Re: D. Lakshminarayana Chettiar and Another, a full bench of this Court has held as follows:
''Cause of action'' means the bundle of essential facts which is necessary for the plaintiff to Prove before he can succeed in the suit, or to put it
differently, it refers to the media upon which the Court arrives at a conclusion in his favour. A cause of actin is something more than a ground or,
unity or title. It not only includes the � facts necessary to support the plaintiff''s title, but also the facts which entitle him to relief against a
particular defendant.
In the present case, the plaint allegations do not satisfy the ratio enunciated in the above decision.
In elaborating the legal principles established by judicial decisions, this Court in paragraph 12(g) and (h) had stated as follows:
12(g) that in giving or refusing leave or maintaining or revoking leave the court will ordinarily take into consideration the balance of convenience
And may, if the balance is definitely in favour of the defendant, apply the doctrine of forum of conveniences;
(h) that the Court may refuse leave or revoke leave on the ground of balance of convenience although there be no evidence of bad faith or abuse of
process on the part of the plaintiff;
The learned Additional Advocate General also relied upon an another Division Bench judgment of this Court in Tuticorin Alkali Chemicals and
Fertilizers Ltd. Vs. Cochin Silicate and Glass Industries and Another, , which decision once again relied upon the earlier decision of the Bull Bench
in Lakshminarayana Chettiar''s case. After referring to those decisions, in paragraphs 5 and 6, it was observed as follows:
We do not say that in considering the balance of convenience as to the forum for instituting a suit, it would be necessary (like the principles of
injunction) to se the ultimate injury that a party may suffer but we do find support to our view and we state in no uncertain terms that in deciding
whether to refuse leave or not, it would be necessary to see on facts and not, on assumptions, who shall suffer-the plaintiff or the defendant-if the
leave is granted or refused, as the case may be.
We would have proceeded ourselves to examine the facts pleaded on behalf of the plaintiff to see whether facts show that most of the
transactions took place within the jurisdiction of this Court or a small part of the cause of action arose within the jurisdiction of this Court, for, if
most of the transactions were done within the jurisdiction of this Court obviously the defendants found it convenience to transact their business for
all purposes within the jurisdiction of this Court but only to defeat the grant of leave on the Original Side of this Court, the plea of convenience is
raised. We would also have examined ourselves as to whether keeping in view the nature of the transactions between the parties from which
transactions the present suit has arisen, it would be inconvenient to the defendants to defend themselves before this Court or would be inconvenient
to the plaintiff if he is asked to go to institute the suit in Cochin as pleaded by the defendants. We, however, refrain for, if we do so, we shall usurp
the jurisdiction and discretion of the learned single Judge, who is to decide whether to grant leave or not. Since we are of the opinion that a proper
adjudication is necessary on all relevant facts of the case before deciding whether to grant leave or not and since it has not been done in passing the
impugned judgment we are inclined to interfere with the impugned order. The impugned order, for the said reason, is set aside. The case is remitted
to the Original Side of this Court for a re-hearing and decision on the question whether leave should be granted or not, in accordance with law.
This appeal is accordingly allowed. No costs.
In support of the contentions of the defendant, they filed two volumes of typed set of papers, containing certain invoices issued by the plaintiff
and also the sanction letter given by the Bank.
In opposition to the above arguments, Mr. Rahul Balaji, learned Counsel appearing for the plaintiff placed reliance upon the decision of the
Supreme Court in A.B.C. Laminart Pvt. Ltd. and Another Vs. A.P. Agencies, Salem, , wherein the Supreme Court dealt with the scope of the
Court''s jurisdiction u/s 20(c) of CPC. It was also held that when parties transact on the basis of a Clause in the agreement, the Clause must be
deemed to have been formed part of the agreement and the parties would be bound by it. Reliance was placed upon the following passage found
in paragraph 22 of the said judgment, which is as follows:
Coming to Clause 11 we already found that this Clause was included in the general terms and conditions of sale and the order of confirmation
No. 68/59 dated October 2, 1974 with the general terms and conditions was sent from Udyognagar, Mohmadabad, Gujarat to the respondent''s
address at 12 Suramangalam Road Salem, Tamil Nadu. The statement made in the SLP that Udyognagar, Mohamadabad, Gijarat is within the
jurisdiction of the civil court of Kaira has not been controverted. We have already seen that making of contract was a part of the cause of action
and a suit on a contract therefore could be filed at the place where it was made. Thus Kaira court would even otherwise have had jurisdiction. The
bobbins of metallic yearn were delivered at the address of the respondent at Salem which, therefore, would provide the connecting factor for court
at Salem to have jurisdiction. If out of the two jurisdictions one was excluded by Clause 11 it would not absolutely oust the jurisdiction of the court
and, therefore, would not be void against public policy and would not violate Sections 23 and 28 of the Contract Act. The question then is whether
it can be construed to have excluded the jurisdiction of the court at Salem. In the Clause ''any dispute arising out of this sale shall be subject to
Kaira jurisdiction'' ex facie we do not find exclusionary words like ''exclusive'', ''alone'', ''only'' and the like. Can the maxim ''expressio unius est
exclusio alterius'' be applied under the facts and circumstances of the case? The order of confirmation is of no assistance. The other general terms
and conditions are also not indicative of exclusion of other jurisdiction. Under the facts and circumstances of the case we hold that while connecting
factor with Kaira jurisdiction was ensured by fixing the situs of the contract within Kaira, other jurisdictions having connecting factors were not
clearly, unambiguously and explicitly excluded. That being the position it could not be said that the jurisdiction of the court at Salem which court
otherwise had jurisdiction under law through connecting factor of delivery of goods thereat was expressly excluded....
The learned Counsel for the plaintiff also placed reliance upon the Division Bench judgment of this Court presided by P. Sathasivam, J. (as he
then was) in P.T. Ummer Koya, Hon. Secretary, All India Chess Federation Vs. Tamil Nadu Chess Association and Others, . In that case it was
held that to decide a matter as to whether the court has jurisdiction or not, only the plaint averments will have to be looked into, and for that
purpose, one must not go by pleadings of the other party.
In order to reject the suit or to revoke the leave on the grounds of lack of cause of action, the parties must bring their pleas within the scope of
Order 7 Rule 11(a). The Supreme Court in Liverpool and London S.P. and I Asson. Ltd. Vs. M.V. Sea Success I and Another, dealt with the
scope of rejecting a plaint in terms of Order 7 Rule 11(a). It is necessary to refer to the following passages found in paragraphs 139, 140, 146,
147 and 149 of the said judgment, which are as follows:
Rejection of plaint
Whether a plaint discloses a cause of action or not is essentially a question of fact. But whether it does or does not must be found out from
reading the plaint itself. For the said purpose the averments made in the plaint in their entirety must be held to be correct. The test is as to whether
if the averments made in the plaint are taken to be correct in their entirety, a decree would be passed.
Cause of action
A cause of action is a bundle of facts which are required to be pleaded and proved for the purpose of obtaining relief claimed in the suit. For
the aforementioned purpose, the material facts are required to be stated but not the evidence except in certain cases where the pleading relies on
any misrepresentation, fraud, breach of trust, wilful default, or undue influence.
It may be true that Order 7 Rule 11(a) although authorises the court to reject a plaint on failure on the part of the plaintiff to disclose a cause
of action but the same would not mean that the averments made therein or a document upon which reliance has been placed although discloses a
cause of action, the plaint would be rejected on the ground that such averments are not sufficient to prove the facts stated therein for the purpose
of obtaining reliefs claimed in the suit. The approach adopted by the High Court, in this behalf, in our opinion, is not correct.
In D. Ramachandran v. R.V. Janakiraman this Court held : (SCC p.271, para 8)
It is well settled that in all cases of preliminary objection, the test is to see whether any of the reliefs prayed for could be granted to the appellant if
the averments made in the petition are proved to be true. For the purpose of considering a preliminary objection, the averments in the petition
should be assumed to be true and the court has to find out whether those averments disclose a cause of action or a triable issue as such. The court
cannot probe into the facts on the basis of the controversy raised in the counter.
In D. Ramachandran v. R.V. Janakiraman it has been held that the court cannot dissect the pleading into several parts and consider whether
each one of them discloses a cause of action.
If it is seen in that context projected by the plaintiff, it cannot be said that no part of cause of action arose within the jurisdiction of this Court.
Therefore, the application for revocation of leave cannot be entertained. Hence, the application in A.No.1886 of 2009 stands dismissed.
The plaintiff had prima facie established the delivery of materials pursuant to the purchase orders and also they have a right of repossession. If
those materials, i.e. WEGs are disposed, the plaintiff will be put to great sufferings. Therefore, both on the ground of prima facie as well as on the
ground of balance of convenience, the application seeking for an interim injunction in O.A. No. 75 of 2009 will stand allowed.
In respect of the application No. 379 of 2009 regarding the grant of a prohibitory order, the plaintiff had not stated that the property supplied
will be secreted by the defendant to the detriment of the plaintiff. No such case is made out. Already, this Court in O.A. No. 75 of 2009 had
granted an interim injunction from alienating the property. There is no averment that in the event of the plaintiff succeeding in the suit, he will still
suffer in recovering the amounts. Therefore, when no such pleadings are found, the question of granting a prohibitory order will not arise. Hence,
the application in A. No. 379 of 2009 stands dismissed. No costs.